Question

Oriole Company purchased machinery with a list price of $92000. They were given a 5% discount by the manufacturer. They paid $600 for shipping and sales tax of $4100. Oriole estimates that the machinery will have a useful life of 10 years and a residual value of $30000. If Oriole uses straight-line depreciation, annual depreciation will be

Answer 1

Annual Depreciation $6,210

Step-by-step explanation:

The computation of the annual depreciation using straight-line depreciation method is given below;

Price of Machine $92000

Less: Discount at 5% -$4,600

Add: Shipping Charges $600

Add: Sales Tax $4,100

Cost of Machine $92,100

Less: Residual Value -$30,000

Depreciation Basis $62,100

Divided by Useful Life 10 years

Annual Depreciation $6,210